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Case 3:17-cv-05659-WHA Document 620 Filed 09/30/19 Page 1 of 12
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`Pages 1-12
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`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
`SAN FRANCISCO DIVISION
`
`FINJAN, INC., a Delaware
`Corporation,
`
`Plaintiff,
`
`v.
`
`JUNIPER NETWORKS, INC., a
`Delaware Corporation,
`
`)
`
`))
`
`)
`Defendant.
`_____________________________)
`
`TRANSCRIPT OF TELEPHONIC DISCOVERY HEARING
`BEFORE THE HONORABLE THOMAS S. HIXSON
`UNITED STATES MAGISTRATE JUDGE
`
`APPEARANCES:
`
`For Plaintiff:
`
`For Defendant:
`
`Transcription Service:
`
`YURIDIA CAIRE, ESQ.
`DANIEL D. WILLIAMS, ESQ.
`Kramer Levin Naftalis & Frankel, LLP
`990 Marsh Road
`Menlo Park, California 94025
`(650) 752-1700
`
`JOSHUA P. GLUCOFT, ESQ.
`Irell & Manella, LLP
`1800 Avenue of the Stars, Suite 900
`Los Angeles, California 90067-4276
`(310) 277-1010
`
`Peggy Schuerger
`Ad Hoc Reporting
`2220 Otay Lakes Road, Suite 502-85
`Chula Vista, California 91915
`(619) 236-9325
`
`Proceedings recorded by electronic sound recording; transcript
`produced by transcription service.
`
`) Case No. 17-cv-05659-WHA
`
`San Francisco, California
`Courtroom A, 15th Floor
`Thursday, June 27, 2019
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`Case 3:17-cv-05659-WHA Document 620 Filed 09/30/19 Page 2 of 12
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`2
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`SAN FRANCISCO, CALIFORNIA
`
`THURSDAY, JUNE 27, 2019 11:11 A.M.
`
`(Call to order of the Court.)
`
`--oOo--
`
`THE CLERK: We are here in Civil Action 17-5659, Finjan,
`
`Inc. v. Juniper Networks, the Honorable Thomas S. Hixson,
`
`presiding.
`
`And, counsel, let’s hear your appearances and we’ll start
`
`with the Plaintiff.
`
`MS. CAIRE: This is Yuridia Caire from Kramer Levin on
`
`behalf of Finjan.
`
`MR. WILLIAMS:
`
`Daniel Williams from Kramer Levin on
`
`behalf of Plaintiff Finjan.
`
`THE CLERK: And how about Defendants?
`
`MR. GLUCOFT: Your Honor, it’s Josh Glucoft from Irell
`
`& Manella on behalf of Defendant Juniper Networks.
`
`THE COURT: Good morning, everyone. So we are here on
`
`the joint discovery letter brief concerning Finjan’s relationship
`
`with and lawsuit against Trustwave. So let me put this question
`
`to Finjan.
`
`Why aren’t RFPs 3 to 5 and No. 13 relevant to
`
`determining the degree of comparability between the Trustwave
`
`license and the hypothetical negotiation in this case, as well as
`
`to calculating the reasonable royalty?
`
`MS. CAIRE: Good morning, Your Honor. This is Yuridia
`
`Caire. Well, this is -- the Finjan v. Trustwave case is a breach
`
`of contract litigation.
`
`We’ve given Juniper the actual license
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`Case 3:17-cv-05659-WHA Document 620 Filed 09/30/19 Page 3 of 12
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`3
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`agreement with Trustwave, and there’s really been no other
`
`evidence that a breach of contract or that additional royalties
`
`would need to be paid under that agreement would be relevant to
`
`any damages analysis in this case.
`
`THE COURT: What about the negotiations surrounding the
`
`license agreement with Trustwave?
`
`Could that shed light on the
`
`hypothetical negotiation here or a reasonable royalty here?
`
`MS. CAIRE:
`
`No, Your Honor, because they already have
`
`the actual agreement and Finjan has already produced mediations
`
`leading up to the signed agreement with Trustwave.
`
`THE COURT: Okay.
`
`You mean --
`
`MS. CAIRE:
`
`So what they’re seeking is actually
`
`information related to the breach of contract issue.
`
`THE COURT:
`
`Well, some of that is.
`
`But like RFP 3 is
`
`seeking "communications and documents regarding any agreements
`
`between Finjan and Trustwave involving the patents-in-suit."
`
`That’s not necessarily even about the lawsuit, is it?
`
`MS. CAIRE: Well, I guess it depends at what time frame,
`
`Your Honor. So leading up to it, we agreed to produce everything
`
`up to the original agreement. And from what I understand, they’re
`
`seeking information regarding negotiations that may be related to
`
`the subsequent acquisition that occurred in the breach of contract
`
`issue.
`
`THE COURT:
`
`But why should I limit them to things
`
`leading up to the 2009 agreement?
`
`Why not the 2012 amended
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`Case 3:17-cv-05659-WHA Document 620 Filed 09/30/19 Page 4 of 12
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`4
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`agreement?
`
`MS. CAIRE: Again, Your Honor, I think we actually have
`
`produced communications up through 2012, and I think we would be
`
`willing to give communications up to that date.
`
`But our
`
`understanding was they were seeking information past that.
`
`THE COURT:
`
`I think they are.
`
`That’s right.
`
`But why
`
`isn’t that relevant as well?
`
`MS. CAIRE: Because that’s all related to the breach of
`
`contract issue. And so they’ve already got the actual agreement.
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`And so I don’t understand what a breach of contract or any
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`communications relating to a breach of contract would have to do
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`with product management (ph).
`
`THE COURT: Well, one of the issues -- and this gets to
`
`the breach of contract issue -- is that one of Trustwave’s
`
`defenses is to say that they actually don’t use or Finjan hasn’t
`
`sufficiently allege that they use Finjan’s patents in the products
`
`they sell. Isn’t that relevant to the issue of irreparable harm,
`
`including whether Trustwave is a competitor and then secondary
`
`considerations of known obviousness?
`
`MS. CAIRE:
`
`No, Your Honor, because the agreement was
`
`signed in -- the original agreement was signed in 2009, amended in
`
`2012.
`
`And so as far as if seven years later the new acquired --
`
`you know, the acquiring company is still using the product, is not
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`relevant.
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`There’s been no evidence that any sales or additional
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`sales would change that.
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`Case 3:17-cv-05659-WHA Document 620 Filed 09/30/19 Page 5 of 12
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`5
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`THE COURT:
`
`Okay. Juniper, can you respond?
`
`MR.
`
`GLUCOFT:
`
`Yes,
`
`Your
`
`Honor.
`
`So
`
`I
`
`think
`
`fundamentally, Your Honor has really hit the nail on the head.
`
`There are several reasons why the documents we’re seeking, created
`
`not just up until 2009 but through the 2012 amendment, and then
`
`certainly beyond that, especially up until the 2016 acquisition
`
`attempting alleged converting a fully paid-up license into an
`
`ongoing royalty license.
`
`So from -- just from the damages perspective, obviously if
`
`you have a fully paid-up license, you need to know if you can
`
`convert that to a royalty rate or an expected royalty rate for a
`
`damages analysis -- which is something that we would be doing as
`
`part of our damages analysis -- you have to know how many products
`
`are sold that allegedly would have been royalty-bearing had it
`
`been a per-unit royalty rather than a fully paid-up lump sum as
`
`the original 2009 agreement was.
`
`And so the fact that there’s a dispute between the parties
`
`as to how many products (indiscernible) and what -- how they may
`
`or may not (indiscernible) because, remember, Finjan has a
`
`portfolio of patents, many of which are not asserted against
`
`Juniper -- all of those things are highly relevant to how we turn
`
`that into expected royalty rates and we can say this is or is not
`
`comparable for the reasons that you have to adjust higher or
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`lower.
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`In addition to that, there’s also, for example, a provision
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`Case 3:17-cv-05659-WHA Document 620 Filed 09/30/19 Page 6 of 12
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`6
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`in the agreement that requires the parties to annually negotiate
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`what the appropriate license would be and the -- excuse me -- what
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`the appropriate royalty rate would be in the event of an
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`acquisition.
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`And so even post the Singtel acquisition, there is
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`-- we’re expecting to see documents that say, Hey, I don’t think
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`your technology is worth that much and this is my rate. And then
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`Finjan coming back and -- I mean, each year the 2012 amendment at
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`least compensates the parties negotiating what the appropriate
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`royalty rate is.
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`And so looking at this 2009, it misses so much of the
`
`picture.
`
`Taking a step back, though, we’re not just saying that this
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`is relevant -- that these documents are relevant to damages. They
`
`are necessary for marking and they’re also highly relevant to
`
`their consideration.
`
`There’s one thing I want to point out, by the way, about
`
`marking -- which Finjan has suggested was moot in their opposition
`
`-- we actually provided Finjan with a stipulation, a draft
`
`stipulation saying, Okay, if you guys are not going to allege
`
`constructive notice, then let’s formalize this so that the parties
`
`are clear as to what is and is not part of this case.
`
`And at least to my knowledge, they never even got back to us
`
`with a response. I has a post-draft (ph). So for all intents and
`
`purposes, constructive notice is still in the case and, as I’m
`
`sure
`
`Your
`
`Honor
`
`is aware, the law requires that all or
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`Case 3:17-cv-05659-WHA Document 620 Filed 09/30/19 Page 7 of 12
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`7
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`substantially all of a licensor/licensee’s product bear the
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`marking of the patent number that they practice. And so what we
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`need to do is we need to get to the bottom of which Trustwave
`
`product practiced which patents, are those -- are those the
`
`patents that are asserted against Juniper and, if so, were they
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`marked.
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`And so all of the disputes -- all of the discussions
`
`between the parties, taken the audit report identifying which
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`products practiced, that’s all relevant to the marking defense
`
`which isn’t moot because Finjan refuses to stipulate to it.
`
`THE COURT:
`
`On that issue, I understand that they may
`
`have refused to sign the stipulation, but they did send you that
`
`email and now there’s the emails in the record and they’re using
`
`it to affirmatively state in the letter brief that they’re not
`
`asserting constructive notice at the upcoming trial. Aren’t you
`
`pretty solid on that? Like if they tried to assert constructive
`
`notice in front of Judge Alsup, don’t you have a pretty good
`
`record at this point that they can’t do that?
`
`MR. GLUCOFT:
`
`So certainly we wouldn’t forget about
`
`these. I think there is and there has been a dispute between the
`
`parties as to what exactly constructive notice requires -- what
`
`exactly that means under Section 287. And so certainly, you know,
`
`if it were so straightforward that no constructive notice at the
`
`upcoming trial and that were totally sufficient, that’s what we
`
`would have put in the proposed stipulation. But there’s a lot of
`
`case law that comes with Section 287. We want to make sure that
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`Case 3:17-cv-05659-WHA Document 620 Filed 09/30/19 Page 8 of 12
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`8
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`it’s clear what is and isn’t being asserted.
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`And if you’ll
`
`notice, for example, they also always qualify things like "at the
`
`upcoming trial." And because (indiscernible) second trial in this
`
`case, there may very well be future trials, we’re unclear as to
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`even
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`what
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`that
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`qualification means both in a context of
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`(indiscernible) and in the email.
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`And so, again, we’re just -- we’re not sure where the
`
`potential disagreement may be.
`
`But for whatever reason, the
`
`parties still haven’t seemed to finalize anything and we can’t
`
`rely on this email when the parties have a disagreement in the
`
`past about what constructive notice actually means as is required
`
`under Section 287.
`
`THE COURT: Okay. Thank you. Finjan, can you respond?
`
`MR. WILLIAMS:
`
`Your Honor, this is Daniel Williams on
`
`behalf of Finjan. I heard Defendant’s counsel say that Finjan did
`
`not respond to their draft proposal, and I would just like to
`
`correct for the record that Finjan did actually provide edits to
`
`their draft proposed stipulation.
`
`So we -- so the parties are
`
`still negotiating that stipulation for the marking.
`
`THE COURT: I see. Okay. Thank you.
`
`MS. CAIRE:
`
`Your Honor, I could, if you’d like, any
`
`further questions I can also address.
`
`THE COURT: I did have a question. You made an argument
`
`that even if I think all this stuff is relevant, I could still
`
`deny the motion to compel because Juniper has pending ESI requests
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`Case 3:17-cv-05659-WHA Document 620 Filed 09/30/19 Page 9 of 12
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`9
`
`that may result in the production of these documents.
`
`I didn’t understand that argument. If I grant the motion to
`
`compel, I’m just telling you to produce something.
`
`I’m not
`
`telling you how to do it. If you accomplish it through ESI, you
`
`know, good for you.
`
`So what -- can you explain what you meant
`
`with that ESI argument?
`
`MS. CAIRE:
`
`Sure, Your Honor.
`
`So, actually, the RFPs
`
`that
`
`they’re
`
`relying
`
`on,
`
`three
`
`of
`
`them
`
`are
`
`related
`
`to
`
`communications, and so those would be all covered under the ESI.
`
`The other two are documents related to negotiations and what they
`
`include in the royalty payments or payment amount and obligations
`
`to pay royalties. And so we’re saying that it’s premature because
`
`we’re still negotiating and finalizing the ESI terms, which one of
`
`their terms was Trustwave.
`
`And so as far as whether they would
`
`want -- you know, it seems to us that it’s a fishing expedition to
`
`(indiscernible) on things that they already have information on
`
`and will get additional information if, you know, Your Honor finds
`
`that any information post-2012 should also be produced and it will
`
`be, you know, produced as ESI rather than having to go and search
`
`for documents to the extent that they’re asking for it in these
`
`RFPs.
`
`THE COURT:
`
`Okay.
`
`Juniper, do you want to respond on
`
`the ESI issue?
`
`MR. GLUCOFT: Yes, Your Honor. So to be clear, the ESI
`
`order sets out -- provides us a process by which each side can
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`Case 3:17-cv-05659-WHA Document 620 Filed 09/30/19 Page 10 of 12
`
`10
`
`select a certain number of custodians, a certain number of search
`
`terms per custodian.
`
`And it is true that for one of the
`
`custodians that we had selected, one of the search terms was
`
`"Trustwave." And so just taking this out there, the first kind of
`
`issue with them hunting through our (indiscernible) class is that
`
`if that particular custodian wasn’t copied on communications or
`
`isn’t the custodian of the documents that we’re looking for, then
`
`we’re never going to get the complete picture because we’re only,
`
`at most, going to receive what this particular custodian, Julie
`
`Montinola, was copied on. So that’s the first issue.
`
`The second issue is actually it still doesn’t resolve the
`
`situation because under the ESI order, the parties reserved the
`
`right to still withhold documents that hit on the search terms if
`
`it was valid -- if it was subject to another valid objection; for
`
`example, privilege, and explicitly including relevance.
`
`And so the concern is that Finjan could again say, Okay,
`
`well, this document, it does hit on the Trustwave search term for
`
`this one custodian that you’ve identified.
`
`But because it only
`
`relates to Trustwave and we believe it’s not relevant for the
`
`reasons listed in our objections to your RFQ and, therefore, we’re
`
`not producing it.
`
`And so the result is that all we’ve done is kick the can down
`
`the road, still requiring the Court to rule on the relevance of
`
`these documents. So we agree with Your Honor that ultimately the
`
`way that they go about searching and identifying these documents
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`Case 3:17-cv-05659-WHA Document 620 Filed 09/30/19 Page 11 of 12
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`11
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`-- obviously, you know, we’re not micromanaging that piece of it.
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`But to pump to what’s coming on with the ESI order, not only
`
`is it most certainly going to miss anything that Ms. Montinola was
`
`not copied on, but it’s also potentially just kicking the can down
`
`the road on the relevance of these documents.
`
`The last final point I’d just like to make, Your Honor, is
`
`that, you know, relevance aside, Finjan -- they’re not alleging
`
`any concrete burden. They’re not saying that they can’t just run
`
`-- you know, they don’t have this all in one handy folder on their
`
`network drive or that they can’t just search their system and pull
`
`up the term "Trustwave."
`
`They’re just saying not relevant, not
`
`relevant, not relevant.
`
`But, I mean, even a marginal amount of
`
`relevance -- and, again, we think it’s substantially relevant for
`
`all the reasons we discussed in the brief -- even a little bit of
`
`relevance is worth what is seemingly no real burden.
`
`They just
`
`haven’t computized it at all.
`
`THE COURT:
`
`Okay.
`
`Thank you.
`
`Counsel, thank you.
`
`I
`
`think I have what I need to issue an order, so I will take this
`
`under submission.
`
`ALL:
`
`Thank you, Your Honor.
`
`THE COURT: Thank you, Counsel.
`
`//
`
`//
`
`//
`
`//
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`I, Peggy Schuerger, certify that
`
`the foregoing is a
`
`correct transcript
`
`from the official electronic sound recording
`
`provided to me of the proceedings in the above-entitled matter.
`
`Signaturé
`
`o
`
`:
`pproved Transcriber
`
`September 26, 2019
`Date
`
`Case 3:17-cv-05659-WHA Document 620 Filed 09/30/19 Page 12 of 12
`Case 3:17-cv-05659-WHA Document 620 Filed 09/30/19 Page 12 of 12
`
`(Proceedings adjourned at 11:25 a.m.)
`
`Peqqy Schuerger
`Typed or Printed Name
`Ad Hoc Reporting
`Approved Transcription Provider
`for the U.S. District Court,
`
`Northern District of California
`
`

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